Fitch credit downgrade ‘puzzling’ and ‘unwarranted,’ Yellen says
Christian Datoc
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Treasury Secretary Janet Yellen criticized Fitch Ratings’s decision to downgrade the U.S. economy to a “AA+” rating in remarks Wednesday.
Fitch announced the downgrade Tuesday evening, citing years of partisan budget squabbles and the ballooning U.S. debt, which dropped the U.S. from its “AAA” rating.
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Yellen’s comments Wednesday came during remarks delivered to IRS employees and mirrored the initial statement she released Tuesday night reacting to the decision.
“Fitch’s decision is puzzling in light of the economic strength we see in the United States. I strongly disagree with Fitch’s decision, and I believe it is entirely unwarranted. Its flawed assessment is based on outdated data and fails to reflect improvements across a range of indicators, including those related to governance, that we’ve seen over the past two and a half years,” the secretary’s prepared remarks read. “Despite the gridlock, we have seen both parties come together to pass legislation to resolve the debt limit, as well as to make historic investments in our infrastructure and American competitiveness.”
Yellen claimed that President Joe Biden and the rest of his Cabinet view “fiscal responsibility” as a priority and outlined a number of positive economic indicators ushered in under his stewardship.
“Over the past few years, the American economy has seen a historic recovery from the depths of the pandemic downturn. Over 13 million new jobs have been created since January 2021. Our unemployment rate stands at 3.6 percent — near historic lows,” her remarks read. “Overall annual inflation has declined every month for the past year. And our economy continues to grow. In the longer term, the United States remains the world’s largest, most dynamic, and most innovative economy — with the strongest financial system in the world.”
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“At the end of the day, Fitch’s decision does not change what all of us already know,” she declared. “That Treasury securities remain the world’s preeminent safe and liquid asset, and that the American economy is fundamentally strong.”
“We strongly disagree with this decision. The ratings model used by Fitch declined under President Trump and then improved under President Biden, and it defies reality to downgrade the United States at a moment when President Biden has delivered the strongest recovery of any major economy in the world,” White House press secretary Karine Jean-Pierre added in her own statement Tuesday night. “And it’s clear that extremism by Republican officials —from cheerleading default, to undermining governance and democracy, to seeking to extend deficit-busting tax giveaways for the wealthy and corporations — is a continued threat to our economy.”